Non-Standard Finance is attempting to push through a hostile takeover of Provident Financial despite only securing the support of 53.5 per cent of the rival subprime lender’s shareholders.
After initially securing the support of three major shareholders common to both companies, NSF — a company set up by Provident’s former chief executive John van Kuffeler — has struggled to gain much ground.
Neil Woodford, through his Woodford Investment Management vehicle, Invesco and Marathon Asset Management have consistently backed the deal.
But NSF has failed to secure the support of other prominent shareholders in Provident including Schroders, which controls 14.6 per cent of Provident’s stock. Last week, Schroders said it would reject NSF’s hostile bid, accusing NSF and some of Provident’s largest shareholders of trying to force through a takeover against the interests of minority shareholders.
Schroders’ refusal to back the deal made it impossible for NSF to reach the 90 per cent threshold of shareholder acceptances which would have allowed it to force out minority shareholders and secure 100 per cent ownership of Provident.
On Wednesday however NSF lowered the level of shareholder acceptances it needed to 50 per cent plus one share, giving it sufficient backing to proceed.
The deal remains conditional however on support from the Financial Conduct Authority and the Prudential Regulation Authority, as well as the competition watchdog. While antitrust approval can be waived, support from the financial regulators is critical to the deal. In March, the FCA warned NSF that it would take “immediate” action if its plans to overhaul Provident led to an increase in unaffordable lending.
Mr van Kuffeler said NSF was “pleased to have passed today’s important milestone” and that the company was “focused on satisfying all remaining conditions as soon as possible”.
The offer remains open for other Provident shareholders to support.
A spokesperson from Provident said: “This deal is not done. In three months, NSF has added just 3.5% of support, which speaks volumes. Three regulators still need to bless this and shareholders should continue to reject this woeful offer.”